10-QPeriod: Q3 FY2013

Trane Technologies plc Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 23, 2013For Securities:TT

Summary

Trane Technologies plc (TT), formerly known as Ingersoll-Rand plc, reported its third-quarter 2013 financial results. For the three months ended September 30, 2013, the company generated net revenues of $3.75 billion, a 4.4% increase compared to the prior year, driven by volume and pricing improvements across most segments, particularly Climate Solutions, Residential Solutions, and Industrial Technologies. Net earnings attributable to Ingersoll-Rand plc were $165.9 million, or $0.56 per diluted share, a decrease from $321.6 million, or $1.03 per diluted share, in the same period last year. This decline was significantly impacted by a $111.4 million non-cash goodwill impairment charge in the Security Technologies segment and increased investment and spin-off related expenses. For the nine months ended September 30, 2013, net revenues grew 2.2% to $10.79 billion. Net earnings attributable to Ingersoll-Rand plc decreased to $571.1 million, or $1.91 per diluted share, from $783.0 million, or $2.50 per diluted share, in the prior year. The company continues to focus on operational excellence and productivity programs. A major ongoing development is the planned spin-off of its commercial and residential security businesses into a new entity, Allegion plc, expected to be completed by year-end 2013. The company also announced an increase in its quarterly dividend and continued its share repurchase program.

Financial Highlights

50 data points
Beta

Revenue

$3.21B

31.0% Gross Margin

Net Income

$165.90M

5.2% Net Margin

EPS (Diluted)

$0.56

Total Assets

$19.00B

Cash & Equivalents

$910.20M

Free Cash Flow

$445.90M

Financial Statements
Beta
Revenue$3.21B
Cost of Revenue$2.22B
Gross Profit$996.50M
SG&A Expenses$617.00M
Operating Income$379.50M
Interest Expense$102.80M
Net Income$165.90M
EPS (Basic)$0.57
EPS (Diluted)$0.56
Shares Outstanding (Basic)291.60M
Shares Outstanding (Diluted)295.50M

Key Highlights

  • 1Net revenues increased by 4.4% to $3.75 billion for the third quarter of 2013, driven by volume and pricing.
  • 2Net earnings attributable to Ingersoll-Rand plc decreased to $165.9 million in Q3 2013 from $321.6 million in Q3 2012.
  • 3A significant $111.4 million non-cash goodwill impairment charge was recorded in the Security Technologies segment during the quarter.
  • 4The company is planning to spin off its commercial and residential security businesses into a new company, Allegion plc, expected by year-end 2013.
  • 5Diluted earnings per share from continuing operations were $0.57 in Q3 2013, down from $1.07 in Q3 2012.
  • 6Total debt increased to $3.53 billion as of September 30, 2013, from $3.23 billion as of December 31, 2012, reflecting increased long-term debt.
  • 7The company repurchased $795.2 million of its shares during the first nine months of 2013 under a new $2.0 billion share repurchase program.

Frequently Asked Questions

The primary driver for the decrease in net earnings was a $111.4 million non-cash goodwill impairment charge recognized in the Security Technologies segment. Additionally, increased investment spending, including $25.7 million in spin-off related costs, also contributed to the decline in profitability.

The company announced in December 2012 its plan to spin off its commercial and residential security businesses into a new, independent company called Allegion plc. The transaction was expected to be completed by the end of 2013, subject to customary conditions and regulatory approvals. Costs related to the spin-off were being incurred and reported in Selling and administrative expenses.

Total debt increased to $3.53 billion at September 30, 2013, from $3.23 billion at December 31, 2012. This increase was primarily due to a significant rise in long-term debt, including the issuance of $1.55 billion in Senior Notes in June 2013. These proceeds were used to redeem older, higher-interest debt and fund spin-off expenses.

The company anticipates slight revenue growth driven by improvements in U.S. residential and new builder markets, alongside benefits from restructuring and productivity programs. However, global industrial and commercial construction markets continue to present challenges. The company is focused on increasing recurring revenue from services and parts, and innovating new products to drive future growth.